Australian start-up Sempo is changing the face of blockchain across the world, one community at a time

With blockchain becoming a commonly proposed solution to everything from tracking unborn babies to disbursing crypto-assets after you die, it’s good to know that not every project is a half-baked idea from the Twilight Zone. It’s not surprising that blockchain fever has reached the world of NGOs and disaster relief with varying degrees of success. One company has been quietly going about the business of bringing game-changing new technology to the humanitarian aid world. Sempo, an Australian blockchain startup that started in 2017, has worked with NGOs like Arcenciel and Oxfam to bring its low-tech cash transfer app to vulnerable populations in remote or underserved communities. 

The beauty of Sempo lies in its community-focused methodology and its different modalities, which are developed based on the specific needs of different communities. Last September, Sempo and Arcenciel successfully brought Sempo’s Android app to seven hundred Syrian refugees in Lebanon – all of whom used one vendor and an SMS system to buy supplies with cash (Dai stablecoin, which can be exchanged wherever possible for fiat currency). This particular system was decided after determining that most people already had access to smartphones in Lebanon. Earlier this year, Sempo and Oxfam paired up for Project Unblocked, a cash transfer pilot program in Vanuatu, which used thirty-three different vendors and a tap-to-pay card system; in this case, as smartphones are rare and expensive in Vanuatu, Oxfam purchased cheap HTC smartphones on Alibaba and loaned them to vendors for the program. The South Pacific nation is spread across dozens of tiny islands, and sits atop an active plate in the “ring of fire,” one of the most earthquake-prone areas in the world. Combine this precarious geographical situation with extreme climate change and Vanuatu’s fragile infrastructure, and you’ve got a highly vulnerable population of nearly three hundred thousand people at constant risk of annihilation.

Oxfam’s Pacific Cash and Livelihoods lead, Sandra Hart, believes that blockchain’s top selling points – accessibility, transparency, and scalability – make it an ideal humanitarian aid assistance tool in geographically distinct places like the South Pacific. The essence of Sempo’s mission is simple: cash is the best and most useful form of aid. In Hart’s words, Project Unblocked made strides in “changing the paradigm of humanitarian assistance in the Pacific to pivot a bit more towards cash as a solution for affected people instead of bags of rice, or food, or tarpaulins and buckets.” This allows people to obtain things they actually need, as well as create a more dignified system of empowerment for aid recipients. But as Sempo and its NGO partners learned, these things take time, as well as a crash course in blockchain basics for both their on-ground teams as well as the communities they serve.

While Sempo provides the tech, its partner NGO provides the local expertise; “the way that [Sempo] designs their products jointly with communities based on feedback from real people, allows them to do product innovation and product development that’s very localized,” Hart explained. During the onboarding process in Vanuatu, someone suggested that Sempo include the community kindergarten as a vendor so that people could pay school fees. The team immediately added “school fees” as a category to the app, and people were able to use it within fifteen minutes. The Sempo team worked with the local community to find out how local vendors operate, down to how they ring up products or if they use a calculator; the end result in Vanuatu meant the app looked like a calculator at the payment stage. It was also an easy sell to onboard local businesses, as according to Hart, most NGOs don’t include small vendors in these types of programs. “They were thrilled,” she said. “Sempo essentially refuses to have the platform used in an environment where they don’t have contact with the community, and that’s very much appreciated, and addressed as a key criticism of humanitarian assistance.” Melanie Hardman, Sempo’s head of operations, sees this an issue of values alignment. “When you’ve got things like materials and good being distributed, there’s no choice for the end recipient,” she said. “If the NGO wants [a recipient] to have true inclusion, and to be able to be in control of their financial situation and determine what their needs are, then that’s the kind of company that we want to partner with.”

In Vanuatu, Oxfam laid the groundwork by doing surveys, interviews, and community research, which revealed who was least likely to receive assistance: single mothers, widows, people with disabilities, and transgender people. “In the Pacific Islands… there’s a collective and community sharing mentality. But…as soon as you just start consulting your community about why we should privilege some people above others, and what is vulnerability, what does it mean? They play a key role in the process,” Hart said. This also opens the door for how the app can be used, potentially as a means to support victims of domestic violence or gender-based violence. Hardman said that the platform doesn’t discriminate against who uses it, or the benefits they get. “It’s really beneficial for women,” she said. “Like our-tap-to-go system – you can enroll quickly. It reduces the time [women] might normally take to travel, and there’s some inherent risks with women traveling in certain regions at night. I think the system inherently supports more empowerment of women being able to make decisions.”

The low-tech, plug-and-play nature of the Sempo app is a world away from blockchain projects like the UN World Food Program’s Building Blocks, which uses biometrics and requires an iris scanner. The likelihood of being able to get a humanitarian aid program ready in a remote location – one that requires an iris scanner – is highly impractical, especially in a post-disaster situation. UNICEF’s adventures in smart contracts ended in failure. Sempo also mentioned that previous aid programs in Akkar didn’t allow recipients’ unused funds to roll over to the next month. On the flipside, Hardman told me that Sempo’s enrolment times were a mere eight minutes for vendors, and 3.6 minutes for recipients. All you need is a smartphone; the system is also designed to function partly offline, with the bulk of the processing done by the vendor. While using a card system isn’t new, Sempo’s community-oriented, modular approach means that it can adapt its system to be as efficient as possible for the community: Hart described how the Vanuatu project’s cash flow centered around using one major local merchant as a “super-vendor” or supernode, which was an expeditious solution to ensure smaller vendors received payments as soon as possible.

That being said, there are still plenty of teething problems that go beyond internet connectivity and financial or technological literacy. When asked about how Sempo’s system deals with bad faith actors – people trying to impersonate beneficiaries – Hardman said that since they’ve only run pilots so far, the beneficiaries have been all identified by their NGO partner. Future iterations of the program will most certainly feature simple security improvements, like tap-to-pay cards with initials or distinguishing marks, as at the moment the cards all look the same. There’s also the issue of the smartphones, which Oxfam had purchased for the pilot. Many vendors wanted to buy the smartphones back at the end of the pilot – something that the team hadn’t anticipated – which is something that they’re hoping to build into the next program.

There’s also the issue of whether local exchanges can and will accept Dai stablecoin, which Sempo encountered during their work in Athens, Greece. “Unfortunately we found that it was very difficult to convince vendors or recipients to go through the process of finding an exchange and then subsequently “cashing-out” their cryptocurrency…we generally had to rely on our previously-adopted method of providing this functionality to end-users ourselves,” the company stated in a 2018 “Learnings Report” post. “This was compounded by the fact that the recipients who did have the capacity to “cash-out” through the exchange simply wanted to buy groceries, which they could already do without cashing out.”

Sempo has also developed a crypto-collateralized voucher to ensure that its e-cards have real backing in the real world. “Theoretically,” said Hart, “You could have the same donor give money to five different countries that a cyclone has just ripped through, and have different NGOs in each country using the same platform to deliver assistance that’s both harmonized and localized to people’s needs and that is the game changer. I mean for me, that’s when I get kind of little chills.”

Project Unblocked also revealed a number of other uses for Sempo’s cash transfer app. “It’s not just about disaster response,” Hardman told me, “it can be ongoing, protracted long-term issues such as conflict… we’re less about that reactive approach.” In that line of thought, while disaster preparedness is always good in such a geologically volatile region, it also introduces a new, scalable financial system to what is largely an unbanked community. Sempo is heavily invested in helping people become literate and comfortable with their system, from how the e-card works to simple troubleshooting issues. In Vanuatu, a woman called Hart’s team claiming that her card had been stolen – within twenty minutes, the team tracked the card to a vendor, made a quick phone call (with plenty of laughing from the vendor), and learned that the woman’s sister had taken the card to buy groceries.

Sempo isn’t the first startup to go down the humanitarian aid path, and it won’t be the last. But at the moment, it certainly seems like most reasonable and responsibly-run program among others.

Combining blockchain with international non-government organizations seems like a good solution to handle many of the problems faced by these organizations, especially when it comes to financial accountability and transparency. The work performed by NGOs is complicated business, as is any operation where human error meets sensitive components like socioeconomic power dynamics, communication barriers, lack of basic infrastructure, and cultural conflict. There’s also just plain evil; past scandals in the NGO world range from exploitative sex-for-hire, missed goals, and the inexcusable predatory opportunism that often ensues in a post-disaster environment.

On the upside, a 2018 study revealed that most of the time, NGOs bring a range of benefits to targeted communities. A Washington Post article stated that “Unfavorable NGO effects included things such as unintended reinforcement of Western ideologies, hollowing out of health systems and exclusionary practices.” Of course, this once western-dominated game now includes China, a huge presence in Africa, which is now facing a bit of pushback. Last but not least, there’s the specter of Libra – Facebook’s own yet-to-be-unleashed cryptocurrency – which recently partnered with relief organization Mercy Corps. As gal-dem excellently summarizes: “Libra will, more pertinently, pave the way for Facebook to gain a larger foothold in areas around the world with limited internet access, even if the gains from using cryptocurrency are negligible.” The idea that Facebook – rotten to the core with numerous critical privacy, security, and public image issues (not to mention the hellscape that is their content moderation model) – could be used as basic economic infrastructure for vulnerable populations is rightly terrifying.

In light of all of these issues, Sempo has a lot to be proud of. In an ideal world, humanitarian aid should be a joint effort between the targeted community and the incoming relief organization, and blockchain seems like a useful way to structure that relationship and bring impactful technological literacy to an underserved community. On her part, Hart is pleased that Project Unblocked has actually produced tangible results. “A lot of the [blockchain] fatigue and the hype is around the fact that there is a lot of talk and there’s not a lot of action. There’s not a lot of examples of tangible solutions to real people’s problems in places where those solutions are needed the most,” she said. Hardman has her eyes set on the future, as well as the uphill challenge of blockchain literacy. “Presenting on panels and things like that is always a good way to get the discussion out there, and to familiarize people with what blockchain and let them know that it’s not this big scary thing and that it can be managed and that it is safe,” she said. “But it really takes long conversations to establish relationships and trust. It takes time. I don’t know how else to say it… it just takes time.”